Economics of Crime
Saturday, Jan. 7, 2017 2:30 PM – 4:30 PM
Hyatt Regency Chicago, Atlanta
- Chair: Philip Cook, Duke University
Industrial Espionage and Productivity
AbstractIn this paper, we investigate the economic returns to industrial espionage by linking information from East Germany's foreign intelligence service to sector-specific gaps in total factor productivity (TFP) between West and East Germany. Based on a data set that comprises the entire flow of information provided by East German informants over the period 1968-1989, we document a significant narrowing of sectoral West-to-East TFP gaps as a result of East Germany's industrial espionage. This central finding holds across a wide range of specifications and is robust to the inclusion of several alternative proxies for technology transfer. We further demonstrate that the economic returns to industrial espionage are primarily driven by relatively few high quality pieces of information and particularly strong in sectors that were closer to the West German technological frontier. Our findings also show that, over the time period considered, industrial espionage crowded out standard overt R&D in East Germany.
The Role of Gun Supply in 1980s and 1990s Youth Violence
AbstractYouth violence, particularly among young black males, particularly in urban areas, increased radically in the late 1980s and early 1990s and then began to fall. The standard explanation for this has been the expansion of crack markets in the 1980s; to the degree that increased gun access among young black males was believed to play a role, the implicit assumption was there was a demand shock in gun markets. We argue that in fact the key driver was a radical reduction in the resources and activities of the Bureau of Alcohol, Tobacco and Firearms (BATF) in the 1980s, allowing substantially greater freedom among licensed gun dealers. This (potentially in conjunction with manufacturing technology improvements) led to a surge in lower-priced, "entry-level" guns. We document that this increased the availability of guns to criminally active youth and led to much higher rates of gun access for young men, particularly for 25 ACP, 380 ACP and 9mm autoloaders. The increase and decrease in gun violence can be matched to changes along this causal chain. In contrast, the link between crack markets and gun violence appears to be largely spurious and driven by a shared trend of growth in the United States from 1985 to 1993.
Criminal Network Formation and Optimal Detection Policy: The Role of Cascade of Detection
AbstractThis paper investigates the effect of cascade of detection, that is, how detection of a criminal triggers detection of his network neighbors, on criminal network formation. We develop a model in which criminals choose both links and actions. We show that the degree of cascade of detection plays an important role in shaping equilibrium criminal networks. Surprisingly, greater cascade of detection could reduce ex ante social welfare. In particular, we prove that full cascade of detection yields a weakly denser criminal network than that under partial cascade of detection. We further characterize the optimal allocation of the detection resource and demonstrate that it should be highly asymmetric among ex ante identical agents
Avoiding Convictions: Regression Discontinuity Evidence on Court Deferrals for First-Time Drug Offenders
AbstractThis paper studies the causal impact of court deferrals, a legal strategy to help defendants avoid a felony conviction record, on the future criminal and labor market outcomes of first-time felony drug offenders. To accomplish this, we exploit two natural experiments in Harris County, Texas, in which defendants appearing in court one day versus the next experienced abruptly different likelihoods of deferral. In 1994 deferral rates dropped by 34 percentage points the day following the implementation of a penal code reform; in 2007 deferral rates increased by 22 percentage points the day after the unexpected failure of a ballot initiative to expand the county jail. Using administrative data and local polynomial regression discontinuity methods, we find robust evidence consistent across both experiments that regimes with expanded use of court deferrals generated substantially lower rates of reoffending and unemployment over a five-year follow-up period. Additional analysis delves further into the timing, nature and incidence of these impacts. Together our results suggest that increasing the use of deferral programs may be an attractive and feasible option for a jurisdiction seeking to reduce the fiscal cost and community impact of its criminal justice system.
- K4 - Legal Procedure, the Legal System, and Illegal Behavior